Budget 2027: when do the tax proposals become law?

Budget 2027 was presented on 9 October 2026. It proposes lower tax rates for SMEs, a bigger personal relief for employees and a higher limit for small asset write-offs. None of these is law yet. As of 27 October 2026, the bill that will carry them had not been tabled in Parliament.

Here is how a budget proposal becomes law, where things stand, and what business owners can do while they wait.

Two bills, two jobs

The budget is carried by two separate bills.

The Supply Bill 2027 deals with spending. It allows the government to use public money in 2027. It was tabled for first reading on 6 October 2026, and the Prime Minister read his budget speech when moving its second reading on 9 October.

The Finance Bill deals with tax. It amends the Income Tax Act and other tax laws so that the proposed rates, reliefs and deductions actually apply. The tax proposals in the budget speech depend on this bill. We could not find any report of it being tabled as of 27 October 2026.

How a bill becomes law

Each bill goes through the same steps:

• First reading: the bill is formally presented in the Dewan Rakyat and its text is published. There is no debate.
• Second reading: members debate the bill's general principles and vote on it.
• Committee stage: the bill is examined clause by clause, and amendments can be made.
• Third reading: a final vote in the Dewan Rakyat.
• Dewan Negara: the Senate goes through the same readings.
• Royal assent: the bill is presented to the Yang di-Pertuan Agong for assent.
• Gazette: the law is published in the Gazette and becomes an Act.

A measure can still change at any of these stages. The final wording of the Act is what counts, not the budget speech.

Where Parliament is now

The current Dewan Rakyat meeting is scheduled to run until 8 December 2026. For the Supply Bill 2027, the timetable reported so far is:

• Policy debate: 12 to 22 October
• Ministers' winding-up: 26 to 29 October
• Committee stage: from 2 November

Reports differ on when the committee stage ends, so we have left out an end date.

Last year's pattern

Budget 2026 was presented on 10 October 2025. The Finance Bill 2025 was tabled in the Dewan Rakyat on 18 November 2025, about five weeks later.

If this year follows last year's pattern, the Finance Bill 2026 could be tabled around mid-November 2026. That is only an estimate. No date has been announced.

Which proposals depend on the Finance Bill

These are the main Budget 2027 tax proposals for SMEs and employers, with the start dates the Ministry of Finance has proposed:

• SME tax rates of 14% on the first RM150,000 and 16% on RM150,001 to RM600,000, from year of assessment (YA) 2027
• Small value assets written off in full up to RM3,000 per item, from YA2027
• Individual relief raised from RM9,000 to RM12,000, and changes to the individual tax bands, from YA2027
• Salaries deductible for non-SME companies only if paid through a financial institution or approved cashless method, from YA2028
• Tax deduction for employers who repay staff PTPTN loans, from 1 January 2027 to 31 December 2028
• Stamp duty changes, such as the RM10 cap on peer-to-peer financing agreements, from 1 January 2027

Some of these start before the bill is likely to be passed. That is normal. A Finance Act can set a start date such as YA2027 even if it is gazetted later.

Changes to sales and service tax, such as the trader refund and the lower rate on elderly care, may come through the Finance Bill or through separate orders. We will confirm this when the bill is published.

What does not need the Finance Bill

Some budget items are not tax law at all.

The minimum wage rise to RM2,000 from June 2027 will be made through a new Minimum Wages Order. That is how the current RM1,700 rate was set, by the Minimum Wages Order 2024. The new order has not been gazetted. It should confirm the exact start date and how the exemption for businesses with sales under RM50 million will work.

Grants and subsidies, such as the halal certification grant, the MediAsas premium subsidy for SMEs and microfinancing, are spending. They depend on the Supply Bill and on each agency's own rules.

What to do in the meantime

• Plan with the proposals, but do not treat them as final. Rates and conditions can change before the Act is gazetted.
• If your company's basis period for YA2027 starts on 1 January 2027, your CP204 tax estimate is due before then, possibly before the Finance Bill is passed. Base it on your expected profit. You can revise it in the 6th, 9th and 11th month of the basis period if the law or your figures change.
• Keep invoices for small asset purchases and records of how you pay salaries, so you can claim the new rules if they are passed as proposed.
• For payroll, wait for LHDN's 2027 PCB schedule before changing monthly tax deductions.

We will update this article when the Finance Bill is tabled and again when it is passed.

This article is general information, not tax advice.

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